As a young professional, retirement may seem like it’s something that will happen to you in the far-off future. When you’re getting started with your career, it can be hard to imagine what life might look like when you stop working. But rest assured, it will happen! As time goes on and you get closer to your goal retirement age, these thoughts become more real and stressful. Here are some tips for how to make sure that you’re prepared for retirement by the time it comes around.
Why You Should Start Planning for Your Retirement Now
Your retirement plan should start now because the earlier you start saving and investing for retirement, the more money you’ll have when it comes time to stop working. Many investments like stocks and annuities have a learning curve. You may feel overwhelmed with questions like “how do I invest in stocks?” and “what is an annuity?” But don’t worry! Everyone starts out the same way. Starting now ensures that you’ll be knowledgeable enough to make smart investments early.
The top reasons to start saving now are:
- The earlier you start, the more money you’ll have when it comes time to retire
- You may not be able to save as much later in life because your expenses will increase, and so will taxes
- If you wait until retirement, there’s a good chance that inflation will eat up the value of your money
- Your income decreases after retirement; with less income each month, it will take more time to save up for retirement
How to Save Money for Your Future
Saving money can be divided into two categories earning more money and spending less.
Earn More: Take on an additional job or freelance gig if you have the time, energy, and resources to do so. With the extra income, you can put away even more toward your goals.
Spend Less: Cut back on discretionary spending by cutting out nonessential items like coffee shops. Try going out with friends instead a few times a week and do fun and free activities around town. Avoid driving or even owning a car if possible, and instead invest in a bike or public transit pass.
It’s important to save money so you can start investing. The key to early retirement is letting your money make more money!
Investing in Real Estate
A lot of young professionals think investing in real estate isn’t possible at their age. However, it’s not as hard to achieve as you might think! Investing in real estate can be an excellent way to accelerate you on your path to financial freedom. It’s essential to learn how you can use real estate as a tool for retirement, and then it won’t be long until you’re purchasing your very own mansion..
Real estate investing can help you retire early because it provides a passive income stream. If you can buy and sell (or lease) the same property several times before deciding to retire, you can generate enough cash flow to help pay your living expenses for years without any additional work.
The main benefits of real estate investing are:
- It’s quicker than other investments and more lucrative
- It’s much safer and less risky because, unlike stocks or bonds, it’s not subject to economic fluctuations such as interest rates going up or employment falling off significantly
- You’ll have more control of your investment, because you are in charge of what happens daily at the property
Investing in Stocks and Bonds
You’re never too late to get in the stock game. In fact, buying stocks and bonds might be the best way to retire early! Whether you’re young or old, there are benefits to investing in stocks and bonds that can help you reach your retirement goals. It’s not just about buying a few shares of stock and selling them for a profit later it’s also about building wealth over time, so instead of settling for a hotel room at the beach for a week, you can afford to buy your dream beach home during retirement!
Investing in stocks is slightly riskier because you could lose all of your money if the company goes bankrupt or doesn’t do well financially. That’s why it’s crucial to invest wisely by researching various companies before investing in them.
The main benefit of investing in bonds is that like other investments such as annuities, they offer safety meaning if there is a recession or crash when people sell, you’re protected. That’s why having a combination with both stocks and bonds is best to optimize gains while minimizing risk. That makes your road to becoming a millionaire a little shorter!
Investing in a Fixed Annuity
When we retire, we often hope to be somewhere on a beach sipping on a margarita without a care in the world. But what’s a safe and reliable investment to get you there? There are several safe investment options for you to choose from, and an annuity may be one. However, many people are unsure as to what is a fixed annuity and how an annuity works. An annuity is like building your future retirement by investing today!
This is a long-term investment that you can purchase through a financial professional, and an insurance company issues it.
But what about your traditional bank account? Isn’t that just as reliable of an investment? The answer is, yes; it’s a decent way to earn money but the big difference is that they can have a variable interest rate that fluctuates over time, so it’s hard to know what your savings will be worth when you retire. Fixed annuities have an annual percentage yield and are guaranteed to provide a certain amount each year. If you invest in a fixed annuity now and keep it until retirement, you’ll never have to worry about losing money due to inflation or rising interest rates. Margaritas here you come!
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